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Benefit Study - Scenario 6SOUTH MIAMI PENSION PLAN ACTUARIAL STUDY AS OF OCTOBER 1, 2010 - 1 - EXECUTIVE SUMMARY At the request of the City, we have completed ten (10) year projections illustrating the financial impact of several proposed plan provisions for General Employees of the South Miami Pension Plan. Background – The Plan is currently open to future General Employees of the City. General Employees are currently eligible for retirement benefits upon the attainment of age fifty- five (55) with completion of ten (10) years of service. The benefit accrual rate for General Employees is currently two and a half percent (2.50%) for each year of credited service through September 30, 1999 and two and three quarters percent (2.75%) for each year of credited service after October 1, 1999. General Employees currently receive a supplemental benefit in the form of an annual cost of living adjustment based on the consumer price index, not to exceed 3% annually. Final Monthly Compensation (FMC) used to calculate the retirement benefits of General Employees is currently the average of the final thirty-six (36) months of compensation during employment with the City. Compensation shall mean regular wages and salaries including overtime, excluding bonuses, vacation, sick leave and other additional compensation. Proposed Changes – We understand the City wishes to determine the effect on current and future City contributions of the following proposed changes in benefit provisions for General Employees of the City.  Scenario 1 – The Plan is closed to future General Employees. Future General Employees will enter a defined contribution plan, with General Employees contributing 7.0% of compensation and the City contributing a matching 7.0% of compensation.  Scenario 2 – The current accrued benefits of General Employees are frozen and payable under the current terms of the Plan at the currently defined normal retirement date – the later of attainment of age fifty-five (55) and completion of ten (10) years of credited service. Future benefit accruals, including increases due to increases in FMC, will be payable at the proposed new normal retirement date – the later of attainment of age sixty (60) and completion of ten (10) years of credited service.  Scenario 3 – The benefit accrual rate is reduced to two and a quarter percent (2.25%) per year for future credited service. SOUTH MIAMI PENSION PLAN ACTUARIAL STUDY AS OF OCTOBER 1, 2010 - 2 -  Scenario 4 – The supplemental benefit (COLA) for General Employees is eliminated for future benefit accruals, including increases in the current accrued benefit due to increases in FMC. General employees will receive the supplemental benefit on their current accrued benefit.  Scenario 5 – The definition of Final Monthly Compensation (FMC) is changed for future benefit accruals to the average of the final sixty (60) months of basic compensation but not less than current Final Monthly Compensation as of October 1, 2010. Basic compensation excludes commissions, overtime pay, bonuses and any other forms of additional compensation outside of base wages.  Scenario 6 – Combination of Scenarios 1 through 5 above. Results – The table on the following page shows the current net City contribution (cost) and the sum of the projected net City contributions (costs) over the next five (5) and ten (10) years for the baseline (current Plan) forecast and for each Scenario described above separately and combined as a dollar amount ($thousands) and as a percentage of projected covered payroll, respectively. As you may be aware, in the event that more than one change is being considered, it is important to note results from separate projections cannot generally be added together to produce the total. The total can be considerably different than the sum of the parts due to the interaction of various Plan provisions, actuarial assumptions and actuarial methods with each other. SOUTH MIAMI PENSION PLAN ACTUARIAL STUDY AS OF OCTOBER 1, 2010 - 21 - Scenario 6 – Combination of Scenarios 1 through 5. The following Table shows the projected payroll and a comparison of the projected City costs under the baseline forecast versus Scenario 6. Fiscal(Combined)Cumulative YearCoveredReduction inReduction in End Payroll Dollar % of Pay Dollar % of Pay City Cost City Cost 20123,853,670639,69416.6%440,75711.4%198,937198,937 20134,053,710747,93518.5%516,82512.7%231,110430,047 20144,252,793801,20918.8%562,45513.2%238,754668,801 20154,451,506837,35318.8%577,98113.0%259,372928,173 20164,646,915871,74318.8%590,74312.7%281,0001,209,173 20174,849,355910,31418.8%607,53612.5%302,7781,511,951 20185,049,164947,14518.8%621,77412.3%325,3711,837,322 20195,263,555985,05818.7%635,15012.1%349,9082,187,230 20205,470,0841,022,76918.7%649,06811.9%373,7012,560,931 20215,640,2151,053,00018.7%657,48311.7%395,5172,956,448 5 Year Totals21,258,5943,897,9342,688,7611,209,173 10 Year Totals47,530,9678,816,2205,859,7722,956,448 Projected City CostProjected City Cost Current PlanScenario 6 SOUTH MIAMI PENSION PLAN ACTUARIAL STUDY AS OF OCTOBER 1, 2010 - 22 - 0 20 0 , 0 0 0 40 0 , 0 0 0 60 0 , 0 0 0 80 0 , 0 0 0 1, 0 0 0 , 0 0 0 1, 2 0 0 , 0 0 0 Pr o j e c t e d  Ne t  Ci t y  Co s t Sc e n a r i o  6 ‐ Sc e n a r i o s  1 th r o u g h  5 co m b i n e d Cu r r e n t  Pl a n Sc e n a r i o  6 SOUTH MIAMI PENSION PLAN ACTUARIAL STUDY AS OF OCTOBER 1, 2010 - 23 - 0. 0 % 2. 0 % 4. 0 % 6. 0 % 8. 0 % 10 . 0 % 12 . 0 % 14 . 0 % 16 . 0 % 18 . 0 % 20 . 0 % Pr o j e c t e d  Ne t  Ci t y  Co s t  as  a Pe r c e n t a g e  of  Co v e r e d  Pa y Sc e n a r i o  6 ‐ Sc e n a r i o s  1  th r o u g h  5 co m b i n e d Cu r r e n t  Pl a n Sc e n a r i o  6 SOUTH MIAMI PENSION PLAN ACTUARIAL STUDY AS OF OCTOBER 1, 2010 - 6 - Fi s c a l ( C o m b i n e d ) Pr o j e c t e d Pr o j e c t e d Cumulative Ye a r C o v e r e d M e m b e r C o s t M e m b e r C o s t R e d u c t i o n i n R e d u c t i o n i n En d Pa y r o l l Do l l a r % o f P a y % o f P a y Do l l a r % o f T o t a l P a y % o f D B P a y Ci t y C o s t City Cost 20 1 2 3 , 8 5 3 , 6 7 0 6 3 9 , 6 9 4 1 6 . 6 % 1 3 . 7 % 4 4 0 , 7 5 7 1 1 . 4 % 8 . 7 % 1 9 8 , 9 3 7 1 9 8 , 9 3 7 20 1 3 4 , 0 5 3 , 7 1 0 7 4 7 , 9 3 5 1 8 . 5 % 1 5 . 6 % 5 1 6 , 8 2 5 1 2 . 7 % 1 0 . 5 % 2 3 1 , 1 1 0 4 3 0 , 0 4 7 20 1 4 4 , 2 5 2 , 7 9 3 8 0 1 , 2 0 9 1 8 . 8 % 1 6 . 0 % 5 6 2 , 4 5 5 1 3 . 2 % 1 1 . 4 % 2 3 8 , 7 5 4 6 6 8 , 8 0 1 20 1 5 4 , 4 5 1 , 5 0 6 8 3 7 , 3 5 3 1 8 . 8 % 1 6 . 1 % 5 7 7 , 9 8 1 1 3 . 0 % 1 1 . 4 % 2 5 9 , 3 7 2 9 2 8 , 1 7 3 20 1 6 4 , 6 4 6 , 9 1 5 8 7 1 , 7 4 3 1 8 . 8 % 1 6 . 0 % 5 9 0 , 7 4 3 1 2 . 7 % 1 1 . 4 % 2 8 1 , 0 0 0 1 , 2 0 9 , 1 7 3 20 1 7 4 , 8 4 9 , 3 5 5 9 1 0 , 3 1 4 1 8 . 8 % 1 6 . 1 % 6 0 7 , 5 3 6 1 2 . 5 % 1 1 . 4 % 3 0 2 , 7 7 8 1 , 5 1 1 , 9 5 1 20 1 8 5 , 0 4 9 , 1 6 4 9 4 7 , 1 4 5 1 8 . 8 % 1 6 . 1 % 6 2 1 , 7 7 4 1 2 . 3 % 1 1 . 4 % 3 2 5 , 3 7 1 1 , 8 3 7 , 3 2 2 20 1 9 5 , 2 6 3 , 5 5 5 9 8 5 , 0 5 8 1 8 . 7 % 1 6 . 1 % 6 3 5 , 1 5 0 1 2 . 1 % 1 1 . 4 % 3 4 9 , 9 0 8 2 , 1 8 7 , 2 3 0 20 2 0 5 , 4 7 0 , 0 8 4 1 , 0 2 2 , 7 6 9 1 8 . 7 % 1 6 . 1 % 6 4 9 , 0 6 8 1 1 . 9 % 1 1 . 4 % 3 7 3 , 7 0 1 2 , 5 6 0 , 9 3 1 20 2 1 5 , 6 4 0 , 2 1 5 1 , 0 5 3 , 0 0 0 1 8 . 7 % 1 6 . 0 % 6 5 7 , 4 8 3 1 1 . 7 % 1 1 . 3 % 3 9 5 , 5 1 7 2 , 9 5 6 , 4 4 8 20 2 2 5 , 8 6 0 , 1 8 8 1 , 0 9 9 , 6 0 5 1 8 . 8 % 1 6 . 2 % 6 7 9 , 5 1 4 1 1 . 6 % 1 1 . 5 % 4 2 0 , 0 9 1 3 , 3 7 6 , 5 3 9 20 2 3 6 , 0 7 6 , 0 6 2 1 , 1 4 7 , 0 6 2 1 8 . 9 % 1 6 . 3 % 7 0 0 , 6 6 0 1 1 . 5 % 1 1 . 8 % 4 4 6 , 4 0 2 3 , 8 2 2 , 9 4 1 20 2 4 6 , 3 0 3 , 4 6 4 1 , 2 0 5 , 5 9 3 1 9 . 1 % 1 6 . 5 % 7 3 0 , 7 8 2 1 1 . 6 % 1 2 . 3 % 4 7 4 , 8 1 1 4 , 2 9 7 , 7 5 2 20 2 5 6 , 5 3 2 , 8 7 8 1 , 2 5 0 , 0 9 7 1 9 . 1 % 1 6 . 6 % 7 4 9 , 1 9 9 1 1 . 5 % 1 2 . 3 % 5 0 0 , 8 9 8 4 , 7 9 8 , 6 5 0 20 2 6 6 , 7 6 8 , 9 6 9 1 , 2 8 2 , 9 3 7 1 9 . 0 % 1 6 . 4 % 7 5 9 , 8 0 3 1 1 . 2 % 1 2 . 0 % 5 2 3 , 1 3 4 5 , 3 2 1 , 7 8 4 20 2 7 7 , 0 0 0 , 6 7 1 1 , 3 4 1 , 6 7 1 1 9 . 2 % 1 6 . 6 % 7 8 6 , 9 7 8 1 1 . 2 % 1 2 . 5 % 5 5 4 , 6 9 3 5 , 8 7 6 , 4 7 7 20 2 8 7 , 2 3 7 , 0 8 0 1 , 3 7 7 , 9 5 4 1 9 . 0 % 1 6 . 5 % 7 9 9 , 8 8 5 1 1 . 1 % 1 2 . 4 % 5 7 8 , 0 6 9 6 , 4 5 4 , 5 4 6 20 2 9 7 , 4 9 1 , 3 6 9 1 , 4 2 2 , 8 0 9 1 9 . 0 % 1 6 . 4 % 8 2 0 , 0 3 7 1 0 . 9 % 1 2 . 4 % 6 0 2 , 7 7 2 7 , 0 5 7 , 3 1 8 20 3 0 7 , 7 4 0 , 5 7 5 1 , 4 8 2 , 9 9 6 1 9 . 2 % 1 6 . 6 % 8 4 9 , 2 1 6 1 1 . 0 % 1 3 . 0 % 6 3 3 , 7 8 0 7 , 6 9 1 , 0 9 8 20 3 1 8 , 0 0 0 , 4 2 4 1 , 5 3 4 , 2 4 1 1 9 . 2 % 1 6 . 6 % 8 7 4 , 1 6 1 1 0 . 9 % 1 3 . 3 % 6 6 0 , 0 8 0 8 , 3 5 1 , 1 7 8 20 3 2 8 , 2 7 1 , 1 9 3 1 , 5 8 0 , 2 0 5 1 9 . 1 % 1 6 . 6 % 8 9 6 , 7 8 5 1 0 . 8 % 1 3 . 5 % 6 8 3 , 4 2 0 9 , 0 3 4 , 5 9 8 20 3 3 8 , 5 3 9 , 9 3 2 1 , 5 5 5 , 2 9 7 1 8 . 2 % 1 5 . 7 % 8 7 4 , 8 2 1 1 0 . 2 % 1 0 . 9 % 6 8 0 , 4 7 6 9 , 7 1 5 , 0 7 4 20 3 4 8 , 8 1 9 , 6 0 9 1 , 5 4 4 , 1 5 8 1 7 . 5 % 1 5 . 0 % 8 6 5 , 9 9 4 9 . 8 % 8. 9 % 6 7 8 , 1 6 4 1 0 , 3 9 3 , 2 3 8 20 3 5 9 , 1 0 6 , 6 6 1 1 , 6 0 0 , 3 9 6 1 7 . 6 % 1 5 . 0 % 9 0 0 , 1 0 8 9 . 9 % 9. 4 % 7 0 0 , 2 8 8 1 1 , 0 9 3 , 5 2 6 20 3 6 9 , 3 9 5 , 1 1 3 1 , 6 0 6 , 0 1 8 1 7 . 1 % 1 4 . 6 % 9 0 1 , 6 8 5 9 . 6 % 7. 7 % 7 0 4 , 3 3 3 1 1 , 7 9 7 , 8 5 9 20 3 7 9 , 6 8 9 , 6 9 6 1 , 6 4 3 , 1 8 2 1 7 . 0 % 1 4 . 4 % 1 , 0 2 8 , 4 8 4 1 0 . 6 % 1 5 . 0 % 6 1 4 , 6 9 8 1 2 , 4 1 2 , 5 5 7 20 3 8 9 , 9 9 7 , 7 0 8 1 , 6 3 2 , 6 5 4 1 6 . 3 % 1 3 . 8 % 9 8 0 , 9 4 9 9 . 8 % 9. 5 % 6 5 1 , 7 0 5 1 3 , 0 6 4 , 2 6 2 20 3 9 1 0 , 3 1 8 , 5 8 3 1 , 7 0 4 , 5 6 0 1 6 . 5 % 1 4 . 0 % 1 , 0 1 0 , 0 8 9 9 . 8 % 9. 6 % 6 9 4 , 4 7 1 1 3 , 7 5 8 , 7 3 3 20 4 0 1 0 , 6 5 3 , 2 4 1 1 , 7 5 1 , 9 3 5 1 6 . 4 % 1 3 . 9 % 1 , 0 4 3 , 1 2 1 9 . 8 % 9. 9 % 7 0 8 , 8 1 4 1 4 , 4 6 7 , 5 4 7 20 4 1 1 0 , 9 9 4 , 8 3 1 1 , 6 7 7 , 3 7 5 1 5 . 3 % 1 2 . 7 % 9 8 4 , 4 7 5 9 . 0 % 7. 0 % 6 9 2 , 9 0 0 1 5 , 1 6 0 , 4 4 7 10 Y e a r To t a l s 4 7 , 5 3 0 , 9 6 7 8 , 8 1 6 , 2 2 0 5, 8 5 9 , 7 7 2 2, 9 5 6 , 4 4 8 30 Y e a r To t a l s 2 1 2 , 3 2 9 , 2 1 4 3 8 , 2 5 6 , 9 6 5 23 , 0 9 6 , 5 1 8 15 , 1 6 0 , 4 4 7 Pr o p o s a l Pr o j e c t e d C i t y C o s t Pr o j e c t e d C i t y C o s t C u r r e n t P l a n